Is a Binding Treaty the Way Forward for Business and Human Rights?

Last week in Geneva, a United Nations intergovernmental working group (IWG) held its first week-long session to debate the parameters of a potential binding treaty concerning corporate human rights abuses.

The talks are the first steps in a process marked by significant divisions between wealthy and developing nations. The IWG session did little to bridge that divide, meaning that any treaty process that moves forward is unlikely to garner the much-needed support of the world’s most powerful countries.

About the IWG and the debate surrounding a binding treaty

Last week’s session came about as a result of the U.N. Human Rights Council’s adoption, one year ago, of resolution 26/9, which established the IWG with the specific mandate to create “an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations.”

The working group is open-ended, and any U.N. Member or Observer state, specialized agency, or other intergovernmental organization, national human rights institution or non-governmental organization may attend the public meetings.

Prior to the IWG session in Geneva, there was no consensus in the international community regarding the utility of a binding treaty on transnational corporations and human rights (broadly, business and human rights, or BHR). In fact, the U.N. Human Rights Council vote to establish the IWG in the first place was sharply divided, with 20 countries voting in favor, 14 against and 13 abstaining.

Critics of a treaty, which tend to be multinational corporations, wealthy countries or strong supporters of the U.N.’s Guiding Principles on Business & Human Rights (UNGPs), say that a treaty would undermine the young UNGPs, which are a mere four years old and just starting to gain momentum. Proponents of a binding treaty, on the other hand, criticize the UNGPs for their voluntary nature and inherent weakness as “soft law.” To the UNGPs' critics, a binding treaty would give teeth to an otherwise ineffectual set of ambitions, and help close a widening justice gap in the area of BHR.

The Ruggie critique

Professor Ruggie, the architect of the UNGPs, has himself questioned the expediency of a BHR treaty ever since Ecuador proposed the idea to the U.N. Human Rights Council in 2013. To Ruggie, the doctrinal opposition of the treaty’s strongest supporters, like Ecuador, and its loudest critics, including the U.S. and the EU, is certain to undermine the process and its result. Ruggie, whose work on the UNGPs exemplifies what he calls “principled pragmatism,” points out that international law should be a tool for “collective problem-solving, not an end in itself.” Such a view holds that "the development of any international legal instrument requires a certain degree of consensus among states,” which, at the moment, is absent.

Without such consensus, Ruggie sees two potential outcomes: a negotiation process that drags on for years, ultimately sputtering out and dying; or, a treaty concluded with the support of a coalition of developing countries but opposed by the wealthy home countries of most multinationals. Because a country is only bound by a treaty to which it is a signatory, a BHR treaty counting only poor countries as its members would be a “dead end, delivering nothing to individuals and communities adversely affected by corporate conduct.”

As Chip Pitts, lecturer in law at Stanford and Oxford, pointed out recently, Ruggie has acknowledged that, “at the end of the day,” there is likely to be a strong desire among the international community for “greater benchmarking, for moving from ‘good’ to ‘best’ practices and even formal codification, so that some of the ‘soft law’ products of voluntary initiatives are likely to become ‘harder’ law down the road.” What I think Professor Ruggie might add to that statement today would be: yes, a treaty may be inevitable, but we are still a long way away from its arrival.

Issues raised and resolved at the IWG session

Illustrative of the rich-poor country divide, only 9 of 28 EU member countries attended the first day of IWG consultations, and the U.S. boycotted the process entirely. Moreover, once discussions about agenda and work plan began, the EU bloc became a wedge, demanding that any future treaty encompass all enterprises – regardless of the transnational status of their activities (what I'll call "enterprise scope"). (Recall that the IWG’s mandate is limited to transnational corporations.)

The question of enterprise scope ultimately led to a three-way division among delegations. Some states, including Pakistan, China and Venezuela, remained firmly opposed to changing the scope of the treaty -- i.e., extending it beyond transnationals to include national businesses -- with the EU bloc representing the opposite view. In the middle, the likes of South Africa and Ecuador indicated a general openness to the idea of enterprise scope expansion, but were nevertheless noncommittal.

The issue of access to remedy, arguably the most significant problem facing corporate accountability advocates, likewise failed to generate agreement, reportedly leading to more questions than answers.

On the other hand, consensus was reached regarding the scope of human rights abuses to be covered by a future treaty. Rather than limiting the scope of abuses to “gross violations” of human rights, as Professor Ruggie has suggested, the delegations unanimously agreed that the “full catalogue” of human rights abuses ought to come within the scope of a BHR treaty.

Undermining this and other areas of consensus, however, was the glaring absence and/or silence on significant issues of countries like the U.S., most EU members, Japan and Australia. To be sure, a treaty that emerges without the support and input of at least some of the most influential countries in the world -- home to the most transnational companies -- is unlikely to accomplish anything.

After all, a treaty meant to deliver accountability for human rights abuses, which doesn’t cover the actors most responsible for those abuses, is little more than a piece of paper.

So, should there be a binding instrument in the first place?

Many civil society organizations certainly think so, and it’s hard to argue against any step toward corporate accountability for human rights abuses -- in theory, anyway. In practice, however, I’m inclined to agree with Ruggie and the pragmatists that the time just isn’t right. To Ruggie’s enormous credit, he was able to cobble together a vast coalition in support of the UNGPs, which have more or less been embraced by the world’s most powerful countries and corporations.

While such broad support may give one pause, it is clear that the UNGPs have already affected positive change. For example, according to a recent Economist survey, which polled 853 senior corporate executives in November and December of 2014: 83 percent of respondents agreed (74 percent of whom did so strongly) that human rights are a matter for businesses as well as governments. Moreover, 71 percent said their company’s responsibility to respect human rights went beyond simple compliance with local laws -- a crucial point and not one, I don’t think, widely accepted before the UNGPs came about.

There’s no question that there is a glaring justice gap in terms of corporate accountability for human rights abuses. Yet, the young UNGPs have already begun to change the minds of of many of those leading the world’s largest and most powerful businesses and governments. Rather than turning to focus on a separate -- though complementary -- treaty negotiation process, victims of corporate human rights abuse and their advocates would be better served focusing on further strengthening the UNGPs and seeing them more widely implemented. A binding BHR treaty makes sense -- we’re just not ready for it yet.

Trained as a lawyer, I now focus on legal business development, corporate social responsibility (CSR), and business & human rights. My past experience includes work on complex commercial litigation, international human rights advocacy, education policy, pro bono legal representation, and analysis of CSR challenges in both the private and public sectors.